One of the most anticipated announcements of the year for Social Security's more than 71 million traditional beneficiaries (retired workers, workers with disabilities, and survivors of deceased workers) is now less than six weeks away.

On Oct. 14, the U.S. Bureau of Labor Statistics will publish the September inflation data, revealing the final puzzle piece needed to calculate Social Security's cost-of-living adjustment (COLA) for the upcoming year. Social Security's COLA is effectively a raise passed on to beneficiaries, designed to offset inflation and ensure recipients don't lose buying power.

But next year's raise will contain something that's somewhat unique: a "Trump bump."

President Trump's policies come with potential adverse impacts for America's top retirement program. Image source: Official White House Photo by Patrick B. Ruddy.

For a second consecutive year, a handful of President Donald Trump's policies will directly impact consumer prices and boost Social Security's COLA. While a larger nominal monthly payout probably sounds great, Social Security's Trump bump-driven 2027 COLA comes with potentially serious unintended consequences.

Donald Trump's policies are boosting inflation and Social Security's 2027 COLA estimates

A modest level of inflation is perfectly normal when the U.S. economy is expanding. If U.S. gross domestic product is climbing, we'd expect businesses to have some degree of pricing power over their goods and services.

However, two of the president's policies are having a direct impact on consumer prices, which, in turn, is expected to boost Social Security payouts in 2027.

The first policy should be familiar, since it's the same one that provided a lift to Social Security's 2026 COLA: Trump's tariff and trade policy.

On April 2, 2025, Trump unveiled his Liberation Day tariffs, consisting of sweeping global tariffs and higher reciprocal tariffs on dozens of countries deemed to have adverse trade imbalances with America. Despite these tariffs being invalidated by the U.S. Supreme Court in February 2026, their impact on consumer prices provided a modest lift to last year's Social Security raise.

It'll likely be a similar story in 2027, with the Trump administration recently reinstating sweeping global tariffs, ranging from 10% to 12.5%, on select imports. Adding duties to imported goods can increase domestic production costs, which are then passed on to consumers.

But the more prominent source of Social Security's forecasted Trump bump in 2027 is the Iran war. Shortly after the president approved military action against Iran on Feb. 28, the latter closed the Strait of Hormuz to virtually all maritime traffic. This closure, which has persisted almost continuously for six months, has stymied the flow of a fifth of the world's petroleum liquids, resulting in considerably higher fuel prices.

However, the Iran war isn't just an energy supply issue any longer. Rerouted shipments, altered supply chains, and higher costs for petroleum-based products (e.g., plastics and synthetic polymers) are examples of expenses that have reached the broader U.S. economy.

According to The Senior Citizens League, a nonpartisan senior advocacy group, Social Security's 2027 COLA is projected to reach 3.6%. If accurate, next year's raise would tie for the sixth-largest percentage increase since 1992.

Meanwhile, independent Social Security and Medicare policy analyst Mary Johnson anticipates monthly payouts rising by 3.4%. Regardless of which independent estimate is closer, it would represent the sixth consecutive year in which COLAs have met or surpassed 2.5%. The last time that happened was 30 years ago (1988-1997).

Suffice it to say, the puzzle pieces are falling in place for an outsize Social Security raise in 2027 to account for well-above-average inflation.

Image source: Getty Images.

Big Social Security raises can lead to even bigger problems for America's leading retirement program

But there are two sides to every story, and Social Security's Trump bump-driven 2027 COLA won't be an exception.

Entering 2026, America's leading retirement program found itself in quite a bit of trouble. According to the latest Social Security Board of Trustees Report, the program is staring down a long-term (75-year) unfunded obligation of $29.3 trillion, up more than $4 trillion from the previous year's report. In other words, projected income to be collected through the year 2100 is forecast to be insufficient to cover expected outlays (primarily benefits, but also administrative expenses to oversee Social Security).

However, this isn't the most pressing issue for Social Security or its more than 71 million traditional recipients.

According to the 2026 Trustees Report, the Old-Age and Survivors Insurance trust fund (OASI) -- the OASI pays monthly benefits to retired workers and survivors of deceased workers -- is on track to exhaust its asset reserves by the fourth quarter of 2032. These asset reserves represent excess income collected since inception that's been invested in special-issue, interest-bearing government bonds, as required by law.

US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts

Here's the good news: the OASI doesn't need a dime in its asset reserves to continue doling out benefits to retired workers and survivors of deceased workers. The way Social Security is currently funded, with more than 91% of income collected in 2025 coming from the 12.4% payroll tax on earned income, it can't go bankrupt or become insolvent.

Unfortunately, the depletion of the OASI's asset reserves would signify that the existing payout schedule, including annual COLAs, isn't sustainable. If the latest report proves accurate and the OASI's asset reserves are gone by the fourth quarter of 2032, sweeping benefit cuts of 22% may be needed to sustain long-term payouts.

But here's the catch: the Social Security Board of Trustees models relatively modest annual COLAs into its short- and long-term forecasts. Independent estimates calling for next year's raise to tip the scales at 3.4%-3.6% is far from modest.

While existing beneficiaries will likely enjoy an outsize nominal boost to their monthly Social Security check in 2027, a larger-than-normal COLA, driven by President Trump's policies, runs the risk of depleting the OASI's asset reserves even faster than initially estimated.

Big Social Security raises come with potentially major unintended consequences for current and future beneficiaries.